I started Technopak about 13 years ago in January 1992 on a shoestring budget. At the start, we were a team of three consultants and two support staff, but we worked hard and we worked well. In 1995, I entered into a joint venture with the US-based Kurt Salmon Associates and our firm was rechristened KSA Technopak.
Around 1999-2000, I felt that I should try to broad-base my business in terms of its senior management team rather than relying only on my own leadership.
By then, while we had about 40 consultants and another 20 or more of support staff, I felt the company was still largely perceived as a one-man show, which, of course, was not the case.
But perhaps the perception persisted due to the young age profile of the rest of the team. Hence, I thought I could correct this perception, and also lay the foundations of a quicker growth by bringing in more experienced professionals into the company including some with noticeably more grey hair than the current team.
We inducted seven or eight senior managers, each having between eight and 18 years of experience. One of them was subsequently designated as the deputy managing director, with a clear plan in place to promote him to lead the company while I was to gradually reduce my own direct involvement in the day-to-day running of our company.
However, I underestimated the challenge of blending people from different work cultures successfully into the culture of our company. I am not saying that the work culture of the new senior inductees was wrong, and ours was right. Just that it was different.
Till then, we were highly results- and solutions-driven, and exceptionally client-driven. In fact, that was the reason for our growth as well as goodwill. On the other hand, some of the senior people we had hired were more process-driven.
That we were solution-driven (and client driven) also meant that we were extremely proud of what we were doing. We knew exactly how much hard work we were putting in and had no hesitation is asking our clients what we considered was the appropriate compensation for our company in terms of our fees.
Unfortunately, many of our new recruits were unable to share our own pride and confidence in the quality of our efforts and, hence, slowly but steadily, they ended up damaging our pricing structure by under-quoting in terms of fees and over-committing in terms of deliverables.
In addition, our marketing philosophy relied heavily on building of strong, long-term, professional relationships with our clients as well as prospective clients. Even if we didn't have a project with a client (or a prospect) at any point in time, we would continue to maintain a relationship with them so that whenever they did have a requirement for any consulting assistance, our name would be on top of their minds.
Unfortunately, some of the new people were not comfortable or confident in building such a rapport and we began to lose contact with some of our best clients.
By mid-2002, it was clear that the experiment was not working. The fundamentals of our organisation were shaken, our growth stalled, and our profit margins crashed because while costs went up substantially on account of these senior inductees, revenues stagnated. And since we made less profit, we had little money for investing in developing new products and services.
At that time, my joint venture partner and I took a call to intervene since the business had gone into a dangerous tailspin.
As the first, painful step, we had to let some of these colleagues go. They were solid professionals but were, unfortunately, not the right ones for the company (and vice versa). The next step was to put all expansion and growth plans on hold. We suspended our annual budget for that year, and instead, put all energies on getting the most important business performance indicators right (nature of clients, type of projects, pricing and so on).
At the same time, some of my remaining (senior) team and I took out time to rebuild our contacts and relationships with our erstwhile loyal clients and took them into confidence about the changes in our organisation. We also cut costs brutally to ensure our "break even" points were lower and profitability was restored.
The changes started to show results within six months of restructuring. Once again, we began our association with high quality clients, delivering high-value projects.
In 2003, our revenues grew by 48 per cent and we restored our profit margins to more healthy levels. In 2004, we grew by almost 40 per cent even as we have rebuilt our team and have promoted some of the most promising colleagues to take over more responsibilities.
Would I do again what I did in 1999-2000? It is certain that I have to do so. However, the approach would be different. I would put more effort in hiring young, and investing more in developing them into strong managers.
The process will probably slow us down in terms of taking advantage of all the opportunities, but nevertheless, I hope that we can make up for the same once our internal team is further strengthened steadily over the next 12 to 18 months.
In this way, I hope that we can maintain the core of our culture while continually enriching it with the gradual induction of each new member of our team.
The final lesson that I have learnt from this episode is to keep eyes firmly fixed on the key performance indicators of our business. Many times, chairmen/ boards take their eyes off on these indicators, leaving the business to be managed by "professional managers".
The key is to give operational freedom to the leadership team, but monitor their performance continually through achievement of whatever are the key indicators for the desired performance of the business.
